Why outsourcing your bookkeeping will save you money
Bookkeeping is by far the most annoying part of running a business. It’s boring, repetitive and tedious.
But while it’s all those things – it is one of the most critical aspects to your business.
The value of bookkeeping is in knowing how your business is performing. How much do your customers owe you? Am I making money? How much money do I need to set aside for my BAS next month?
From our experience, there’s a tendency for businesses to get the office manager or receptionist to manage the bookkeeping function of their business. We see many ads on Seek looking for a part-time office administrator/bookkeeper/receptionist/coffee maker/cleaner.
The problem with hiring a jack of all trades is they are a master of none. You wouldn’t get your top performing property manager to be a part-time sales agent, right? It’s a completely different role and requires a specialist set of skills.
What most business owners don’t know is that getting unqualified people to manage the bookkeeping function in-house is indirectly costing them money – they just fail to realise it.
You’re paying your Accountant to fix all the errors
Have you ever wondered why your accountancy fees are so expensive? Most accountants want to help you ensure you’re minimizing your tax and maximizing your business performance. The reality is they spend most of their time fixing up errors in your accounts so they can trust the numbers they’ve been provided.
Accountants rates typically start at $250 an hour, and most bill for every 6-minute increment. Imagine your accountant charging rates like that just to reconcile your GST or bank account because it wasn’t done correctly in the first place?
What you pay in bookkeeping fees is quickly outweighed by the fees paid to your accountant!
You’re paying the ATO late lodgment fees
We’ve all heard horror stories, or perhaps even experienced battles with the ATO with late lodgment penalties and interest or charges on late superannuation payments. Leaving your compliance to the last minute because your admin team is overworked not only costs you money in fines, but can also affect your credit rating with the banks.
These can be mitigated with a professional that ensures you have your BAS and super lodged and paid within lodgment deadlines.
You have limited clarity regarding your financial performance.
Most business owners look at two items to understand if they’re making money. Cash at bank and Sales. If you’re just starting up, this is probably ok. But if you’re growing quickly or you’ve got more than 5 employees, you need to get your head around costs, commission payments and cashflow.
Being able to run financial reports from your accounting system is invaluable to determine how much your customers owe you, what your cash balance is like and, most importantly, if you’re making money!
The problem is that information from those financial reports are only as good as the data that goes into your accounting system i.e. “rubbish in, rubbish out”.
Financial clarity begins with regular, robust bookkeeping. If your office manager isn’t dedicating their time to do this weekly, you’re flying blind.
Outsourcing your bookkeeping may sound like ‘just another unnecessary cost to your business’. The reality is that outsourcing it will save you money in the long run – you just don’t know it.